Correlation Between New York and First Financial
Can any of the company-specific risk be diversified away by investing in both New York and First Financial at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining New York and First Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between New York Community and First Financial Bankshares, you can compare the effects of market volatilities on New York and First Financial and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in New York with a short position of First Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of New York and First Financial.
Diversification Opportunities for New York and First Financial
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between New and First is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding New York Community and First Financial Bankshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Financial Bank and New York is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on New York Community are associated (or correlated) with First Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Financial Bank has no effect on the direction of New York i.e., New York and First Financial go up and down completely randomly.
Pair Corralation between New York and First Financial
Given the investment horizon of 90 days New York is expected to generate 4.27 times less return on investment than First Financial. In addition to that, New York is 1.53 times more volatile than First Financial Bankshares. It trades about 0.02 of its total potential returns per unit of risk. First Financial Bankshares is currently generating about 0.11 per unit of volatility. If you would invest 3,639 in First Financial Bankshares on August 30, 2024 and sell it today you would earn a total of 564.00 from holding First Financial Bankshares or generate 15.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 85.94% |
| Values | Daily Returns |
New York Community vs. First Financial Bankshares
Performance |
| Timeline |
| New York Community |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Weak
| First Financial Bank |
New York and First Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New York and First Financial
The main advantage of trading using opposite New York and First Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New York position performs unexpectedly, First Financial can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in First Financial will offset losses from the drop in First Financial's long position.| New York vs. KeyCorp | New York vs. Fifth Third Bancorp | New York vs. Regions Financial | New York vs. Zions Bancorporation |
| First Financial vs. BOK Financial | First Financial vs. Auburn National Bancorporation | First Financial vs. Great Southern Bancorp | First Financial vs. First Guaranty Bancshares |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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